Recently, actor Leonardo Di Caprio spoke on the issue of climate change. Of course, being a staunch liberal, he basically advocated for policies that increase taxation and regulations to centralize government control. The libertarian in me cringes when rich Hollywood actors advocate for policies that increase the cost of living for people like my family. So I would like to quickly comment on libertarian solutions to climate change.
The fact is, climate change is idiosyncratic to overconsumption of natural resources. But how do we solve it? Government regulation and taxation on emissions? Or is it the role of the government to subsidize clean technology? Well there are several issues.
When placing these tough regulations on emissions standards, there are going to be higher energy prices and food prices, both of which hurt the poor. If there are subsidies given to major corporations to provide clean technology, then there’s the high probability that cleaner and more efficient technology will be excluded from the market, thus causing cronyism and an inability to resolve the issue efficiently.
What’s not understood is that the leaders of these environmental movements believe that our standard of living should be reduced to pre-industrial revolution levels, where human life expectancy was drastically less than current rates. We have over 6 billion people on our planet. These regulations on the energy industry, implemented on a global level, will cause a massive amount of people in third world countries to die. Is that part of the plan? Who do you thinks is going be left over out of the rich and poor?
For the sake of the environment we must, and should, avoid socialism. Socialism would not solve the issue because prices would not be conveyed by supply and demand. In socialism, goods and services are essentially free. When things are free, the people overconsume due to the lack of a price mechanism. High prices convey a shortage in supply, and reduce the incentive to keep purchasing that item until the supply is replenished and prices fall back down. But in socialism, there is no real price, so people naturally overconsume. Consumption can include a visit to a doctor, increase in housing production, free cell phones, and more importantly military spending.
This issue with socialism is precisely why countries that adopt these policies have the worst track record with their environments. In the USSR there were famines, although they had an extraordinary amount of resources. In Malawi, the government subsidized their agriculture industry up to 16% of their GDP. Advocates considered this policy a success, and even called it the beginning of the “Agricultural Revolution,” because during the first five years they had a tremendous surplus in food. After that initial phase the country’s water resources were drastically reduced, and famines began to follow. Think about the California water crisis. California has massive crop subsidies, and the government controls the water supply; furthermore, causing massive mismanagement of the water supply. How wise can governments be?
The best way to combat climate change is to allow for the free market to dictate prices in a natural way. Worldwide there are over $598 billion agricultural subsidize per year, along with over $1 trillion dollars in fossil fuel subsidize per year. What that means is that agriculture is $598 billion dollars cheaper than usual, and $1 trillion cheaper for fossil fuels. These are distorted prices originating from government policies. As a consequence of these artificially lower prices, people consume more on a global scale. In a free market system, prices are dictated by supply and demand. When the price of milk increases, it’s the market sending signals that there are not enough cows for the demand of milk, which causes people to consume less milk because of higher prices. If the government offers free milk, or milk 30 percent off, these signals are distorted. Our current monetary policy is aimed at increasing elasticity in financial markets so consumption can be artificially higher. If you believe in reducing consumption, then you have to be in favor of establishing a gold standard in order to restrict spending, and over investment.
Competition in industry offer new ways of efficient production. A USB card has done more to reduce paper consumption than any government regulation. It’s profitable to do more with less, and that’s what we want. If there could exist an abundance of food without abusing natural resources, then there’s no issue. Socialism and government does not increase innovation, the profit motive does. Karl Marx even stated that capitalist have every incentive to increase efficiency for the capitalist mode of production, offering newer technology. Currently there are hundreds, if not thousands, of patents for new energy technology that are being held up in the regulatory process, sometimes even for decades. We currently regulate competition out of the energy sector because the corporatist structure of government.
The first practical step that we should take is to get rid of all subsidies, whether it be from welfare to oil. The distortion of prices will never solve climate change. If you’re critical of policies effect the poor in a negative way, then remember, the policies advocated by Leonardo Di Caprio and other global warming “experts” would have the same, if not worse, effect on poor people.
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